2019 ANNUAL SUSTAINABILITY BOND REPORT
PT BANK RAKYAT INDONESIA (PERSERO) Tbk. 30 DECEMBER 2019
Introduction – BRI’s commitment to sustainable banking
BANK BRI | 1
PT Bank Rakyat Indonesia (Persero), Tbk., (“Bank BRI” or “BRI”), the largest bank In Indonesiais committed to support Indonesian economy, especially in the aspect of sustainablebanking.
In accordance with Indonesia’s medium-term plan of Sustainable Finance Roadmap 2015 -20191, BRI was one of eight Indonesian banks known as the ‘First Movers on SustainableBanking’ group2, committed to implement sustainable financing as part of globalenvironmental goals. In 2018, BRI was involved in establishing the Indonesian SustainableFinance Initiative (“IKBI – Inisiatif Keuangan Berkelanjutan Indonesia”)3 to promote andimplement inclusive sustainable finance practices. As the chairman of IKBI, BRI strives to
promote strategic programs, share knowledge among the community and buildpartnerships, as well as be a key initiator of early projects in developing applicable greenbusiness models.
BRI continuously strengthens the implementation of sustainable finance (“SF”) principles toaccelerate sustainable growth through closer alignment between economic, social andenvironmental interests. In enhancing financial products and services under the SF principles,BRI expands range of digital banking services to reach more unbanked customers from allwalks of life, improving financial literacy and inclusion.
BRI’s COMMITMENT TO SUSTAINABLE FINANCE
• Implementing prudential principle in carrying out business functions and operations.
• Managing efficient and environmentally friendly operations.
• Consistent in applying loan financing policies in environmentally friendly business sectors and
certified management of environmental impact analysis.
• Supporting the development of priority economic sectors, namely sectors with high multiplier
effects to economic growth such as energy, agriculture, processing industries, infrastructure, as
well as micro, small and medium enterprises (MSMEs).
• Developing employee competency in understanding social and environmental policies and
procedures.
• Providing financial access support for all communities including those who are disadvantaged
and live in remote areas.
• Participating in joint efforts to improve people’s welfare and encourage their participation in
environmental preservation.
BRI is committed to support United Nations
Sustainable Development Goals (“SDG”) through
sustainable finance action plan.
1. https://unepinquiry.org/wp-content/uploads/2015/10/Roadmap-OJK-2015-2019.pdf2. https://www.ojk.go.id/en/berita-dan-kegiatan/siaran-pers/Pages/Press-Release-OJK-Launches-Bali-Center-for-Sustainable-Finance-to-Support-Sustainable-Development-Program.aspx 3. http://ikbi.org/about-us/
First Sustainability Bond in South-East Asia in RegS format
Issuer PT Bank Rakyat Indonesia (Persero), Tbk.
Issue Date 21 March 2019
Tenor 5 years
Size USD 500 million
Issuer Rating Baa2 (Moody’s) / BBB- (Fitch)
Coupon 3.95%
External Review Second Party Opinion from Sustainalytics
Bank BRI’s Inaugural Sustainability Bond – Transaction highlights
Bank BRI Inaugural Sustainability Bond – Key Highlights
Supporting Indonesia’s “First Movers on Sustainable Banking” initiative,in accordance with BRI’s Sustainable Finance (SF) PrinciplesBRI is part of the "First Movers on Sustainable Banking" and Chairman of Indonesian Sustainable Finance Initiative Forum (IKBI)
Alignment with International and ASEAN Sustainability Bond StandardsBRI’s Sustainability Bond Framework is aligned with the ICMA Green BondPrinciples 2018, the ICMA Social Bond Principles 2018 and the ICMASustainability Bond Guidelines 2018, as well as ASEAN Green Bond, Social Bondand Sustainability Bond Standards 2018
Sustainability Bond Framework evaluated by Second Opinion ProviderBRI has obtained a Second Party Opinion from Sustainalytics on its Sustainability Bond Framework with conclusion that the use of proceeds are
credible and impactful
Alignment with UN’s Sustainable Development Goals (“SDGs”)BRI’s Sustainability Bond Framework covers a broad range of UN SDGs, showcasing BRI’s commitment to facilitate the transition to sustainable development in Indonesia across various areas
BANK BRI | 2
41%
1%7%8%
43%
Employment Generation
(Kupedes)
Affordable Housing
Clean Transportation
Green Buildings
Socioeconomic advancement
and empowerment (Micro KUR
loans)
84%
16%
Social Use of
Proceeds
Green Use of
Proceeds
By Eligible Category
As of 30th December 2019, the proceeds of the 2019 BRI Sustainability Bond were fully allocated. Allocation
information by type of project and sector are:
Eligible Category
Amount allocated
(Rp billion)
Amount Allocated
(USD million Equ.)*
% of Total
Employment Generation (Kupedes loans) 2,935 207 41.3%
Socioeconomic advancement and
empowerment (Micro KUR loans)3,015 212 42.5%
Affordable Housing (Subsidized development
or improvement loan policy, “KPRS”)40 3 0.56%
Green Transportation 525 37 7.5%
Green Buildings 585 41 8.2%
Total 7,100 500 100%
Proceed Allocation
By Project Type
*Rp/USD used = 0.0000704225, as of 8 Oct 2019. BANK BRI | 3
Key Sustainable
Development Goals
identified in the BRI
Sustainability Bond
Framework(1)
Key Aspects of the Eligible Categories financed as of end of reporting period
Employment Generation (Kupedes loans)
Rp 2.93 trillion (USD 207 million equ.) has been allocated to Kupedes loans, which the
maximum lending facilities is up to Rp 250 million (USD 17,605 equ.).
These Kupedes loans have empowered and created jobs in more than 65,000
Indonesian MSMEs in a various regions in Indonesia including Sumatra, Kalimantan
and Jawa.
Socioeconomic advancement and empowerment (Micro KUR loans)
Rp 3.02 trillion (USD 212 million equ.) has been allocated for financing and/or
refinancing Bank BRI’s Micro KUR loans, to over 180,000 MSMEs contributing job
creations.
Micro KUR loans loan facilities for start-up micro entrepreneurs with loan ceiling of Rp
25 million (USD 1,760 equ.).
Affordable Housing
Rp 40 billion (USD 2.8 million equ.) has been allocated to mortgage, especially to
distribute government’s subsidized home loans.
These loans helps in providing access of affordable houses to more than 1,200 people.
Clean transportation
Rp 525 billion (USD 37 million equ.) has been allocated to three clean transportationprojects based in Jakarta:
A light rail transportation (LRT) infrastructure project based in Jakarta. The line isestimated to be 45km long, and the project is currently under construction. It isexpected to carry a range of passenger flow of 150,000-300,000 per day in the first5 years.
Investment in airport electric train with a 30 km route with an expected averagepassenger flow of 4,000 people per-day.
Investment in electric train for commuters with an estimated 70km route andaverage passenger flow of 30,000 people per-day.
Green Buildings
Rp 585 billion (USD 41 million equ.) has been allocated to Investment in a green
building project based in Jakarta with “Platinum” level of the GREENSHIP label by
Green Building Council Indonesia.
Proceed Allocation
Source: BRI Sustainability Bond Framework, link: https://ir-bri.com/misc/SR/BRI-Sustainability-Framework-Final-March-vF.pdf BANK BRI | 4
Eligible Category Estimated Social / Environmental Benefits
Employment
Generation (Kupedes
loans)
Supports the development of MSME businesses, estimated to create more than 65,000
jobs(1)
Socioeconomic
advancement and
empowerment
(Micro KUR loans)
Supports the development of MSME businesses which is a bridge for un-bankable
enterprises, estimated to create more than 180,000 jobs(1)
Affordable Housing
1,200 low-income beneficiaries received subsidized loans to provide access to
affordable housing
Sustainable Impact
According to BRI’s Sustainability Bond Framework, the estimated social and environmental impact for Eligible
Categories financed are explained below:
29%
5%58%
7%1%
Sector distribution of
MSME loan portfolio
Agriculture
Fishery
Processing industry
Trading
Transportation and
communication
Rental
22%
5%
45%
15%
5%8%
Affordable Housing loans financed
by geography
Sumatra
Kalimantan
Sulawesi,
MalukuJawa
Bali,NTT,NTB
5%
19%
37%
12%
21%
6%
MSME loans
by geography
Sumatra
Kalimantan
Sulawesi,
Maluku
Jawa
Bali,NTT,NTB
61%11%
12%
15%
1%
Sector distribution of
MSME loan portfolio
Agriculture
Fishery
Processing industry
Trading
Transportation and
communication
Rental
19%
13%
20%22%
22%
4%
MSME loans
by geography
Sumatra
Kalimantan
Sulawesi,
MalukuJawa
Bali,NTT,NTB
(1) Assuming one debtor to employ at least 1 additional employee. Bank BRI confirms all of these MSME loans financed are new loans as
the time of disbursement.
BANK BRI | 5
Eligible Category Estimated Social / Environmental Benefits
Green Transportation
Supports 3 rail projects with a total of 145 km and an expected 84.5 million passengers
carried per year
An estimated 8,590 tons of CO2 avoided or reduced per year attributable to this BRI
Sustainability Bond1)
Green Buildings A new building with “Platinum” level of the GREENSHIP by the Green Building Council
Indonesia
Impact Reporting
(1) The amount of CO2 avoided or reduced is calculated following the index for railway sector in the Railway Handbook 2017 published by the International Energy Agency and the International Union of Railways, link:https://uic.org/IMG/pdf/handbook_iea-uic_2017_web3.pdf, and EIB CO2 evaluation method
(2) See full story at : https://youtu.be/j8F3CAtUC3c
Project Examples
Greater Jakarta light rail transit (LRT)A light metro system currently under construction
connecting Bogor, Depok and Bekasi in West Java
to Jakarta, expected to start operations by April
2021. The 45-km line financed by this Sustainability
bond is a part of the Greater Jakarta LRT network.
The project was announced by the government in
2015 and aims to alleviate road traffic congestion in
the city. It is consisted of three LRT lines with total
investment cost of Rp 23.8 trillion.
According to BRI’s Sustainability Bond Framework, the estimated environmental impact for Eligible Categories
financed are explained below:
MSME: Processed Pineapple Business Mr. Ade Patas is an MSME entrepreneur engaged in
the production of processed pineapple food
products such as pineapple syrup & snacks . He has
been producing for 20 years. He processes small-
sized pineapple which farmers cannot sell to the
market. This business started with capital employed
of only Rp. 250,000, and BRI provided a working
capital loan of Rp. 5 million (USD 350.). Since then
the business continue to grow, and currently BRI
provide loan of Rp 200 million (USD 14,000.). Through
his business, Mr. Patas was able to create jobs
opportunities as well as improve the welfare of the
rural residents.(2)
BANK BRI | 6
Use of Proceeds
Summary of Bank BRI Sustainability Bond Framework
Social Project Categories Environmental Project Categories
Public healthcare centers, public schools and vocational training centers
Access to essential
services
Public clean drinking water infrastructure and sewers system, sanitation infrastructure, and public electricity infrastructure to increase access to electricity
Affordable basic
infrastructure
Development of affordable houses or housing loans for low-income communities(1)
Affordable housing
Financing MSMEs categorized in line with Indonesian government ‘s definition of MSMEs
Employment
generation
For underbanked or non-bankable communities and individuals based (i) products with interest rates below than minimum commercial local lending rate or (ii) “Kredit Usaha Rakyat” (KUR)(2)
Socioeconomic advancement and empowerment
Generation or
transmission renewable energy activities, including offshore and onshore wind, solar, tidal, hydropower (≤25 MW) and geothermal (< 100g CO2/kWh) projects
Renewable energy
New construction or renovation of buildings
that: (i) have or expected to earn: LEED (Platinum or Gold), BREEAM (Outstanding, Excellent; (ii) Improves energy efficiency of manufacturing facilities by more than 15%
Green buildings
Reduction of air emissions, greenhouse gas control, waste prevention, or waste management, which include re-use and recycling
Pollution prevention
and control
Environmentally sustainable agriculture, animal husbandry, fishery, aquaculture or forestry
Environmentally sustainable
management of living natural
resources and land use
Building or operating electrified or hybrid transport, urban metro, rail, and non-motorised, multimodal transportation (such as bicycle lanes and walking routes), or the construction of infrastructure to support mass transportation
Clean transportation
Infrastructure that improve water quality, efficiency or conservation, including the installation or upgrade of infrastructure for clean and/or drinking water, water recycling or wastewater treatment facilities, infrastructure and flooding mitigation systems
Sustainable water and waste water management
(1)Definition of low-income population under Decision of the Minister of Public Works and Public Housing of the Republic of Indonesia Number 552 /
KPTS / M / 2016
(2)KUR Loans as defined under Regulation of the Coordinating Minister for Economic Affairs as Chair of the Financing Policy Committee for Micro,
Small and Medium Enterprises No 11/2017
BANK BRI | 7
Project Evaluation and Selection Management of Proceeds
Summary of Bank BRI Sustainability Bond Framework
Relevant business units are responsible for
nominating projects according to the eligibility
criteria of BRI’s Sustainability Bond Framework
1
Nominated projects will be vetted against the
exclusionary criteria listed in the Framework(1)2
Relevant divisions will review and approve
nominated assets considering factors including:
alignment with the Framework
environmental and social impacts
Bank BRI’s prudent risk management policies
3
Enterprise Risk &
Portfolio
Management
Division
Asset and Liabilities
Management
Division
Treasury Business
Division
Relevant business units will identify and categorize
these projects in line with the Framework4
(1) Please refer to the Framework for the full list of “Activities Ineligible Under the Framework: http://www.ir-bri.com/other_reports.html
(2) Please refer to the Framework for a full list of potential impact indicators: http://www.ir-bri.com/other_reports.html
(3) Source: https://ir-bri.com/misc/SR/BRI-Sustainability-Framework-Second-Party-Opinion.pdf
If any, BRI will place any unallocated
sustainability bond proceeds at its own
discretion into cash or high-quality
marketable instruments such as government
bonds, in accordance with its liquidity
management strategy.
BRI will establish an independent register to
facilitate monitoring and reporting for bond(s)
issued pursuant to the Framework.
BRI will track and monitor its sustainability
bond proceeds through its internal
information systems.
Separate Ledger
Tracking via IT
Unallocated Proceeds recorded
Reporting
BRI is committed to provide sustainability bond
reporting on annual basis, until proceeds are fullyallocated and on a timely basis in case of materialchanges of projects.
Reporting will be made publicly available via BankBRI’s website, sustainability reports and newsletters.
Allocation Reporting
Impact Reporting
Proceed allocation will be categorized by project;
Amount of unallocated proceeds will be reported;
Project examples, if applicable
Selected impact indicators(2)
Extract from the Sustainalytics Second Party Opinionon BRI’s Sustainability Bond Framework(3)
“BRI’s Sustainability Bond Framework is credible andimpactful, and aligns with the Green Bond Principles2018, the Social Bond Principles 2018 , theSustainability Bond Guidelines 2018 and ASEANSustainability Bond Standards 2018”
External Review
BANK BRI | 8
PT Bank Rakyat Indonesia (Persero) Tbk.Head Office
Gedung BRI I
Jl. Jend. Sudirman Kav 44-46
Jakarta 10210
Indonesia
Tel. : (62 21) 251 0244, 251 0254
Fax. : (62 21) 250 0065,250 0077
Website : www.bri.co.id
2019 Annual Sustainability Bond Report